Wednesday, 28 October 2015

The need to
categorise products with regard to their VAT status has led to various high
profile and at times highly unusual situations. In recent times the issue of
VAT charges on sanitary products has been brought to public attention across
Europe. On 15 October French MPs
voted against reducing the rate of VAT on sanitary products from 20% to 5%. The
French government opposed the motion due to the loss of tax revenue by €55
Million (£40 Million). On 26 October British MPs
voted against Labour MP Paula Sherriff’s amendment to the Chancellor’s Finance
Bill to remove VAT on sanitary products. Currently in the UK a VAT rate of 5%
is charged equating to £3 of an average £60 p.a. spend on sanitary products. The charge has attracted attention in various ways including general
election manifesto pledges and online petitions. As of 27 October
in the UK the ‘Stop Period Tax. Period’ group currently has 253,287 signatures with sister campaigns in France, Italy and Germany which call on the
Chancellor to remove VAT on sanitary products. However, the ability to remove
VAT is problematic since currently the lowest permissible rate across the EU
for sanitary products is 5%.

1.The
Introduction of VAT and Regulation at EU Level

VAT was first
introduced in the UK as a fundamental condition of joining the Common Market
due to the previous existence of multi-stage cascade taxes making it impossible
to determine the real amount of tax actually included in the final price of a
particular product. Member States may have subsidised their exports by overestimating
the taxes refundable on exportation. A common system of VAT increased
transparency.

The UK has four
different categories of VAT classification:

· Standard rate
(20%)

· Reduced rate (5%)

· Zero-rate (0%)

· VAT exempt

The UK government of
1975 entered into a once and for all negotiation process to determine essential
items to be zero-rated, such as food meaning VAT is charged, but at a rate of
0%. A zero-rated item can be altered to the reduced or standard rate, but once applied
cannot return to the 0% rate. This differentiates a zero-rated item from a VAT
exempt item in which no VAT is charged at all. In addition if an item was not
included in the original negotiation it cannot be made zero-rated. Schedule 8 of the Value Added Tax Act (1994) contains a list of zero-rated goods
and services, with Schedule 9 containing VAT exempt goods and services. Sanitary products do not
appear in either of these schedules.

EU Legal Basis: Directive 2006/112/EC

The essential legal
instrument regulating VAT application across the EU includes a minimum standard
rate of 15% (at Point 29). The Directive contains three provisions relevant to
the imposition of VAT on sanitary products. Article 98 states that Member
States may apply a discretionary reduced rate to goods and services including
sanitary products within Annex III. Article 99 provides the reduced rates may
not be less than 5%. The UK’s zero-rated items status is preserved by Article
110. Sanitary products were charged at the standard rate in the UK until the
2000 Budget at which point the VAT rate on sanitary products was reduced to 5%.

2.Why
Remove VAT on Sanitary Products?

Although the end
result would be a reduction in cost for the consumer, the rate of VAT being
charged on sanitary products is symbolic of a form of gender discrimination
based on a biological process with campaigners highlighting exotic meats (such
as Kangaroo steaks) and alcoholic dessert jellies are zero-rated and in terms of VAT classification that these items are deemed to be
more essential than sanitary products.

Sanitary products
as a consequence are classed in the UK as non-essential luxury items. It is
this classification that is the flashpoint for the Stop Period Tax campaign
group. When announcing UKIP's intention to remove the tax Suzanne Evans explained
the scenario in which the activity of swimming is VAT exempt, whereas a tampon
which many would regard as a necessity in order to swim is charged at 5%. Consequently
VAT on sanitary products is seen to be an illogical tax on gender as a fallout
from a primarily male government from 40 years ago. To reinforce the gender
equality aspect of this issue in the House of Commons debate in October on the
amendment Stella Creasy MP reinforced the gender inequality aspect of the tax
by stating that male shaving razors are zero-rated, however HMRC lists them as ‘standard’ rated, meaning VAT is charged at 20% on these
items.

3.Election
Pledges and Political Party Support

The Chancellor has
not yet included a commitment to examine the issue in either the pre-Election
or Summer 2015 Budgets. UKIP may have garnered headlines when revealing the
policy in their election manifesto, however it was not the sole political party
including pledges to remove VAT from sanitary products in its General Election
Manifesto. Plaid Cymru also included an intention to repeal the tax but the two
parties took very different approaches; UKIP stated “Outside the EU, we will…be
able to…zero-rate certain goods and services that have previously had VAT
charged on them. This means we can – and will - remove VAT completely from
repairs to listed buildings and sanitary products.” HoweverPlaid Cymru’s Manifesto favoured a collaborative
approach with the European Union, pledging to “remove VAT from women’s sanitary protection
products, making the argument for this in Westminster and in Europe.”

Furthermore each of the UK political party leaders was asked a common
question on the Radio 4 programme Woman’s
Hour about the issue. Ed
Miliband stated “I’d like to go further. I can’t promise I will go further
because there are these rules in place, but I will keep trying, because it
seems to me a ridiculous that you have VAT at all on this.” Nicola
Sturgeon replied “it should go…I am in support of that…it’s a simple case of
right and wrong.”

Previously David
Cameron was asked a direct question by a female student from the University of East
Anglia which in November 2014 elected to sell sanitary products at cost price (however
VAT was still technically charged). Cameron indicated support but acknowledged
the difficulties:

"I have had a look at it in the past. It's quite difficult. Some
VAT things you can change. Other VAT things, if they're linked to other
products, it's quite difficult to do it within the framework of European laws
and I can't remember the answer.”

4.Conclusions
and Options for Future Action

The crux of the
argument surrounding the application of VAT to sanitary products is centred on
the symbolism of VAT as a punishment on gender as opposed to the cost and
financial aspects of paying the tax. It therefore means that campaigners are
searching for a long-term solution. However campaigners want to use the EU
effectively and go beyond aiding only women in the UK by negotiating with the
European Commission to create an EU wide initiative, for example in Hungary the VAT rate is 27%. Laura Coryton of Stop Period Tax was critical of UKIP’s approach in withdrawing from the Union to gain
VAT autonomy:

"The political party have announced their support for the
campaign's ends but not its means. Our campaign has been engineered as a
European-wide initiative. UKIP have supported a UK-specific methodology."
[emphasis added]

The current government
is in an extremely difficult position in terms of ability to removing the rate
of VAT without EU consent based on the negotiations of a government which took
place 40 years ago. Following the House of Commons vote the Financial Chief
Secretary to the Treasury, David Gauke stated "I will raise this issue
with the European Commission and other member states setting out our views that
it should be possible for member states to apply a zero-rate to sanitary
products." On the one hand government negotiation at EU level needs to be
encouraged, however there would need to be unanimity across Member States to
amend the Directive. However the language used in pushing for “zero-rating” may
be flawed.

In order to achieve
the campaigners’ vision of a positive European-wide result campaigners and
politicians should instead attempt to mandate the European Commission to
propose an amendment to the VAT Directive to make sanitary products to be
classified as VAT exempt for the whole of the EU, not zero rated for the UK
only. This would benefit all EU citizens whilst avoiding the controversial
issue of granting the UK extension to the zero-rated discussions which cannot
be applied to other states such as France which does not have a zero-rating
classification system.

However an
amendment of the Directive would require unanimity since this would be a fiscal
matter (114(2) TFEU). Therefore in order to achieve uniform consensus as the
recent example of French MPs voting not to apply the reduced rate illustrates this
power should remain discretionary on the part of the Member States in the same
way that currently it is a discretionary power to charge a reduced rate. VAT
exemption goes further than zero-rating because of the symbolic significance of
charging VAT at all (even if at 0%) is removed in addition to any financial
rationale for removing the tax. For example France, which does not have
zero-rated products, the reduced rate is 5.5% for products deemed to be every
day requirements, however the full standard rate of 20% is applied to sanitary
products.

Further support for
reclassification as VAT exempt is provided for in Article 132 of the VAT
Directive which permits VAT exemptions that are in the ‘public interest’,
including for example ‘medical care’. In addition the Articles 2 and 3(3) of
the TEU Union make reference to ensuring equality between men and women. Making
sanitary products VAT exempt would be a symbolic step by the Union to uphold
these values.

In the absence of a
direct request from Member States the European Citizens’ Initiative (ECI) may
mandate the Commission to act. Introduced following the Lisbon Treaty (Article
11(4) TEU) in areas of Union competence. The petition must have at least one
million signatures across seven EU Member States comprising of a minimum number
of signatures in each Member State determined by population size as outlined in
Annex I of Regulation 211/2011/EU. The minimum number of signatures required
for the UK is 54,000 – at present the Stop Period Tax petition has well in
excess of this number. The existence of sister campaigns with a significant
number of petition signatures indicates that this process may be successful.
However the process is not a cast iron guarantee for an amendment to the
Directive of the classification of sanitary products that many would hope for.
Therefore it is possible to conclude that a long-term solution is tangible
without pulling out of the EU for the benefit of all EU citizens.

In the short term
campaign groups may be inclined to exert pressure on retailers to follow the
examples of the University of East Anglia and sell sanitary products profit
free. For major retailers committing to this approach may benefit in the long
run, attracting new customers who may purchase other products for profit,
however this would be voluntary and fails to address the underlying issue of
the symbolic existence of VAT. In addition any money raised under the current
5% system could be allocated by the Chancellor for specified good causes in a
similar manner to redistribution of LIBOR fines in order to signify that at
least from a revenue raising perspective the government has no qualms about
foregoing income. This would mean that one gender would fund good causes disproportionately, however it may make the best of a bad situation in the
short term.

Historically
there has been a distinction between regulation of broadcasting and regulation
of newspapers, with the latter being subject to much lighter touch regimes,
often self-regulatory. EU law
harmonised, with the Television without Frontiers Directive, television
broadcasting, with newspapers – insofar as they were caught by EU law at all –
being dealt with under the general free movement and competition
provisions. The Television without
Frontiers Directive was revised twice, in the face of changing technology and
the development of on-line information services, and became the Audiovisual
Media Services Directive, harmonising at a minimum level regulation not only in
relation to traditional television, but also on demand provision that was
‘television like’. In this new regime,
care was taken to exclude newspapers. As
services have developed, however, the boundary between a ‘text-based’ newspaper
and audiovisual has become blurred, as newspaper companies started to expand
what was offered, specifically the inclusion of video sections on the newspaper
site. Do such activities still really
qualify for the ‘newspaper exception’? This contentious question arose in a reference from the Austrian courts
in the New Media Online case, which the ECJ ruled on yesterday.

Facts

NMO
was a newspaper company with an online newspaper. While the site mainly features articles from
the written press, it did include a subdomain which provided a catalogue of
video clips across a range of topics.
Very few of the videos, some of which were very short, were connected to
particular news stories. The Austrian
regulatory authorities found that NMO was providing an on-demand audiovisual media service within the sense of
the AVMSD. This was challenged before
the Austrian courts which referred two questions to the ECJ on the meaning of

·A
‘programme’ and

·Audiovisual
media service.

As
regards the first question, the referring court questioned whether very short
clips could be considered equivalent to a programme on tv. In particular it noted that a broadcaster of
television would not put forward such a compilation. The ECJ ruled that the
focus of the analysis should be on the programme (or video clip) and not on the
way the videos are compiled. The ECJ
then pointed out that there is no minimum length for a programme set down in
the AVMSD; further television can include some short programmes. The ECJ took the keystones of the concept to
be their form (that is audiovisual); their audience (a mass audience) and their
impact on that audience, in accordance with the interpretation given in Recital
21. The webservice also fitted within
the scope of the definition of ‘on demand media service’ provided in Article
1(1)(g) AVMSD, in that the moment of viewing the programme is chosen by the
viewer from a catalogue provided by the supplier (here the index on the
website). On that basis the ECJ
concluded that:

‘the manner in which
the videos at issue in the main proceedings are selected is no different from
that proposed in the context of on-demand audiovisual media services which fall
within the scope of that directive’. [21]

In
principle, it seems as though the AVMSD would apply, unless the service can be
said to fall within the ‘newspaper exception’.
Recital 28 specifies that ‘electronic versions of newspapers and
magazines’ lie outside the scope of the AVMSD.
Recital 22 clarifies that audiovisual content which is incidental to
another service and do not constitute the services principle purpose do not
constitute audiovisual media services within the directive. Recital 28 in identifying newspaper and
magazines is a form of subspecies of this general rule. We are left with then the question of what is
incidental. The ECJ made clear that

‘recital 28
… cannot be understood as meaning that an audiovisual service must
systematically be excluded from the scope of
[AVMSD] solely on the ground that the operator of the website of which
that service is a part is a publishing company of an online newspaper’. [28]

This
means that whether or not an on-demand service exists must be assessed on a
case by case basis. Indeed, the ECJ
highlighted the risk of multimedia companies seeking to evade regulation
through a formalistic interpretation of the
AVMSD. This would be particularly
problematic given that one of the purposes of the AVMSD was to create a level
playing field between different operators.
This leads to an approach which looks at the website, rather than the
nature of the provider. The test is
whether the service is:

‘regardless of the
framework in which it is offered, the provision of programmes to inform,
entertain or educate the general public’.
[33]

While
this is a question of fact for the national court, the ECJ specified that the
question is whether the video content has form and content separate from the
newspaper content. Here it was
significant that the content was not linked to specific articles; here the form
of the website cannot be decisive. It is
rather a question of the links between content.

Comment

This
case confirms what has been known for a while in the UK, at least: the recital
28 cannot be seen as an automatic ‘get out of gaol free’ card for newspaper
proprietors. What is noticeable about
the reasoning is the emphasis on the substance of what is provided rather than
formalistic criteria which are capable of manipulation. The ECJ is conscious of the possibility of
abuse and also of the need to ensure consumer (or viewer) protection. It
means that in principle parts of a website could be subject to audiovisual
regulation, though it still seems as though the newspaper elements would not
be. The difficult question is however where precisely the boundary should be
drawn. It has been suggested (within the
UK at least) that separate home pages and separate catalogues for video
sections of sites would tend towards a finding of an on-demand service. Whether the avoidance of such structures
(which seemed at least in part present here) would be sufficient is another
question. In this case, the ECJ emphasised
firstly that length is not a determinative factor and the need to have links
between the content of the newspaper or magazine and the videos. One might question how close the links to the
substance of the newspaper would have to be: would the Max Mosley sex videos
link to any story about Max Mosley?

Thursday, 15 October 2015

‘Members of
the European Parliament shall be elected by direct universal suffrage in a free
and secret ballot.’

In
its brief
and rather low key judgment in Delvigne
(Case C-650/13; ECLI:EU:C:2015:648), which was handed down on 6 October 2015, the
Grand Chamber of the Court of Justice has put flesh on the bones of this
provision. It concluded that national measures taken to determine who is
entitled to vote in European Parliament elections fall within the scope of EU
law as they must be considered to be implementing EU law within the meaning of
Article 51(1) of the Charter of Fundamental Rights. Consequently, Article 39(2)
is applicable in such a situation, as are other Charter Rights. The Court’s
judgment follows the recommendations of Advocate General Villalon’s Opinion
(ECLI:EU:C:2015:363), albeit with much more laconic reasoning and without
reference to the ECHR or Strasbourg case law.

The
CJEU reviewed certain French rules depriving the applicant of his civic rights,
including the right to vote and to stand for election. This sanction was
imposed, by operation of law, consequent upon the applicant’s conviction for a
serious crime and his receipt of a custodial sentence. However, the Court
concluded that measures depriving a person who has been convicted of a serious
crime of the right to vote on an indefinite basis were not precluded by Article
39(2) CFR. The Court did not refer to the European Convention on Human Rights
and Fundamental Freedoms, or the well-known prisoner voting case law of the
European Court of Human Rights. But it did discuss the need for any limitations
on the right to vote to be proportionate, in the sense of pursuing a legitimate
aim of general interest and of taking into account the nature and gravity of
the criminal offence committed and the duration of the penalty imposed. The
Court further held that there was no infringement of Article 49 CFR regarding
the non-retroactivity of criminal sanctions. This part of the case will not be
discussed further in this blog.

Prior
to Delvigne, the only significant excursion
by the Court of Justice into the field of European Parliament voting rights was
in 2006. In Spain v UK (Gibraltar), the Court
rejected an argument led by Spain that the scope of the franchise for European
Parliament elections was determined by EU law. This precluded a challenge
brought by Spain against the UK’s decision to include Commonwealth citizens
within the Gibraltar franchise, when extending the scope of European Parliament
elections to that territory pursuant to the Court of Human Rights judgment in Matthews. The same point about Articles 1(3) and 8 of the 1976
Act on Direct Elections not expressly or precisely defining who are entitled to
vote in EP elections was repeated inEman and Sevinger (Aruba), decided
on the same day. Moreover, the Court in Eman
and Sevinger expressly stated that the provisions on citizenship in what
was then Part Two of the EC Treaty do not confer an ‘unconditional right to
vote and to stand as a candidate in elections to the European Parliament’ on
citizens of the Union (para. 52). The Court highlighted that the citizenship
provisions in Part Two were aimed at guaranteeing access to the vote for those
EU citizens resident outside the state of which they were nationals. The Court
also went on to state that nothing precluded Member States using the criterion
of residence in order to determine who had the right to vote, relying in that
respect on ECHR case law. However, the Court did conclude that an equal
treatment issue arose in the circumstances of the case, because of the
difference in approach under Netherlands law for two groups of Netherlands nationals,
who were not resident in the metropolitan Netherlands. Those resident in Aruba
could not vote, and yet those in third countries could vote. This difference in
treatment (under the general equal treatment principle) needed to be justified.

The
judgment in Delvigne draws on the
groundwork laid down in Eman and Sevinger,
in its application of the proportionality principle to scrutinise national
arrangements on prisoner voting. The applicant was convicted of a serious crime
in 1988 and given a custodial sentence of 12 years. By operation of the law
then applicable, that sentence also entailed the loss of his civic rights, as
he had been convicted of a serious offence. Subsequently, new Criminal Code
provisions abolished the ancillary penalty of loss of civic rights by operation
of law, and laid down that a total or partial deprivation of civic rights must
be the subject of a court ruling, and may not exceed ten years in the case of
conviction for a serious offence. However, Delvigne himself was not affected by
the provisions of the new Criminal Code, as his deprivation of rights resulted
from a criminal conviction that became final before the new Criminal Code
entered into force. In the French courts, he contested a decision to remove his
name from the electoral register in the district in which he was residing, an
act which prevented him voting in the 2014 European Parliament elections,
arguing this was contrary to EU law. To assist its deliberations, the French
court referred a series of questions to the Court of Justice.

The
French government (backed by interveners Spain and the UK) contested the
jurisdiction of the Court, arguing that there was no connection to EU law given
that it lies within the competence of Member States to determine who can vote
in European Parliament elections. The Court noted that EU law is applicable,
under Article 51 CFR, only where Member States are implementing EU law. Citing Gibraltar and Eman and Sevinger, the Court acknowledged (para. 31) that the Act
on Direct Elections does not expressly and precisely determine who are to be
entitled to vote in EP elections. However, in exercising that competence,
Member States are bound ‘by
the obligation set out in Article 1(3) of the 1976 Act, read in conjunction
with Article 14(3) TEU, to ensure that the election of Members of the European
Parliament is by direct universal suffrage and free and secret’, a point which
was supported by the European Commission, the European Parliament and the
German Government in their observations. This creates the connection to EU law.

The words ‘direct universal
suffrage’ have been present in EU primary law for more than 50 years, as they
were included in the original Treaty of Rome, admittedly as an aspiration for
direct elections to be held to the European Parliament. For nearly 40 years
(since the 1976 Act on Direct Elections), the aspiration has been given
concrete form, through a procedure to ensure that the citizens of the Member
States elect the members of the European Parliament. Since the Matthews case before the ECtHR, it has
also been clear that the EP is a legislature vis-à-vis those citizens, and thus that the elections are subject
to the overarching norm of universal suffrage set out Article 3 of Protocol 1
ECHR. This is reinforced by Article 14(3) TEU which adopts the same words as
Article 39(2) CFR. Why has it taken so long to establish that in principle Member
States’ franchise rules in respect of the holding of European Parliament
elections are subject to universal suffrage norms within the framework of EU law (as opposed to by reference to the
ECHR alone, as per Matthews)? Perhaps
the arrival of the Charter of Rights has made a difference. And yet the texts
are precisely the same. As the Court observed (para. 44):

As regards
Article 39(2) of the Charter, it is apparent from the considerations in
paragraph 41 of the present judgment that this constitutes the expression in
the Charter of the right of Union citizens to vote in elections to the European
Parliament in accordance with Article 14(3) TEU and Article 1(3) of the 1976
Act.

Article 39(2) appears, therefore, to
add no additional substantive heft to the principles of universal suffrage
compared to the pre-Charter situation. However, the explanations relating to
the Charter do make it clear that Article 39(2) takes over the basic principles
of the electoral system in a democratic state. This is presumably a reference
to ECHR case law on Article 3 of Protocol 1. And it is perhaps the clear
articulation of the scope of EU law as relating to situations where Member
States are implementing EU law contained
in Article 51 CFR that prompts the CJEU into a clearer holding that franchise
restrictions are subject to the basic principles of EU law than one finds in Eman and Sevinger. The result is the
same, but the route taken is much more elegant. So in that respect the Charter
does help the Court of Justice to put itself in the position to cast its eye
over the French prisoner voting rules.

The resolution of the substantive
issues in the case by the CJEU is very brief. As any ban on prisoners voting is
a restriction on a fundamental right protected by the Charter (the right to
vote in EP elections), it needs to be assessed as a limitation under Article
52(1) CFR. The CJEU quotes the conditions under which limitations on the
exercise of rights are permissible: they must be provided for by law, they must
respect the essence of those rights and freedoms and, subject to the principle
of proportionality, they must be necessary and genuinely meet objectives of
general interest recognized by the European Union or the need to protect the
rights and freedoms of others (para. 46).

It was clear that the ban is
provided for by French law (and indeed in a later part of the judgment not
discussed here, the Court concluded that the approach taken by the French
legislature to maintaining the voting ban in respect of those whose sentence
had already become final before the entry into force of the new law was not
contrary to Article 49 CFR). Second, excluding certain persons under certain
conditions, on account of their conduct, does not affect the essence of the right (para. 48).
Finally, and perhaps crucially for those who were waiting for this case from
the side of the UK, with its fraught debate on prisoner voting, the Court
stated that ‘a limitation such as that at issue in the main proceedings is proportionate
in so far as it takes into account the nature and gravity of the criminal
offence committed and the duration of the penalty’ (para. 49). And that was
pretty much all the Court had to say on the matter. It chose to decide the
proportionality issue itself, rather than referring this back to the national
court. The Court noted the French observations that Delvigne was made subject
to a deprivation of civic rights as a result of being sentenced to a term of 12
years’ imprisonment for a serious crime, and that he also had the possibility
of applying for and obtaining a court order lifting the sanction.

As a case on the Charter of Rights, Delvigne does not break new ground
although it does provide helpful clarifications, especially when one looks at the
Advocate General’s Opinion. As has been argued previously, it follows quite naturally from Eman and Sevinger and from text of
Article 39(2) CFR that the Court would conclude that domestic limitations upon
the European Parliament elections franchise would fall within the scope of EU
law, and that as such they would be subject to a proportionality test. The
value of the case is that it makes the point explicit, whereas the challenge
after Eman and Sevinger was to figure
out from the Court’s judgment what exactly was the link with EU law that gave
the Court jurisdiction to examine the character of the Dutch state’s policies
on external voting in EP elections and to find them to be, in effect, arbitrary
in character (by applying the general Aristotelian principle of equal
treatment). Indeed, it would have been better if the Court in Eman and Sevinger had followed the Advocate General at that time (see paras. 69-71 of
the Opinion), and concluded that there is (has always been since direct
elections?) a freestanding (but obviously not unlimited) ‘right to vote’ in EP
elections on the part of EU citizens. Part of the problem has been that this
right to vote (as an expression of universal suffrage in a democratic context)
has often been confused with the right on the part of non-national EU citizens
in the Member State of residence (which is an expression of the importance that
EU law attaches to the integration of migrant EU citizens in their host state,
so that they do not in fact lose rights as a result of mobility). In Delvigne, the Court carefully separated
the two and made it clear that Article 39(1) CFR, which corresponds to Article
20(2)(b) TFEU, does not apply in a case such as this. Of course, that does not
resolve precisely what mix of Articles 39(1) and 39(2), plus associated TFEU
provisions, might apply to a case involving a non-national EU citizen prisoner
subject to a voting ban in respect of EP elections in the host state, as arose
in the UK in the case of Teshome
v The Lord President of the Council ([2014]
EWHC 1468).

The major difficulty with the
judgment in Delvigne is that unlike
the Advocate General, the Court gives no clue as to whether it has read the
case law of the European Court of Human Rights on Article 3 of Protocol 1, and
thus how it feels that the tests and standards which it applies based on
Article 52 stacks up against the approach taken to contracting state discretion
on prisoner voting in cases such as Hirst v United Kingdom (No
2) (2005) 42 EHRR 849 and
Scoppola v Italy
(No 3) (2012) 56 EHRR 663. The AG’s conclusion was the legislation such
as that at issue in Delvigne was not
precluded by Article 39(2) CFR ‘provided
always that it does not prescribe general, indefinite and automatic deprivation
of the right to vote, without a sufficiently accessible possibility of review,
the latter particularly being a matter which it is for the national court to
establish.’ This sticks close to the ECHR rubric.

It is beyond the scope of this blog
to discuss in detail the fraught political process, the interactions between
domestic case law and Strasbourg case law, and the tentative steps taken within
the UK Parliament in the form of the Draft Voting Eligibility Bill to find a compromise between
Strasbourg and what appears to be the mainstream political opinion in the UK
political elite that giving the right to vote to prisoners is somehow
abhorrent. The twists and turns of this narrative are presented in full in a regularly
updated House of Common Standard Note, which provides a handy timeline. Prisoner voting has become, in the
UK, a lightning rod conducting fears about an over-interventionist Court of
Human Rights, generally underspecified worries that somehow the Human Rights
Act overprotects the human rights of those ‘less deserving’ of those rights,
and ongoing sensitivities about the proper province of the courts, including the
domestic courts, and the legislature in relation to such matters. The domestic
courts have sought to avoid conflict by making it clear that they have nothing
more to say on the issue of prisoner voting in relation to the ECHR, and that
they will not design a scheme in compliance with the ECHR even if Parliament
refuses to act. Some judges, such as Lord Sumption in the Supreme Court in Chester and McGeoch, have been critical
of the Strasbourg approach.

Indeed, for many observers and
members of the political and indeed legal elite, prisoner voting offers the
ideal opportunity to ‘stand up to Europe’, and to insist that human rights
should receive a uniquely ‘British’ interpretation. Unfortunately, it now seems
impossible to have a measured policy debate on the matter of prisoner voting in
the UK and the anomalies thrown up by the current system, although the joint
committee of the two Houses of Parliament charged with looking after the issue
of prisoner voting whilst it remains in the long grass into which it has been
kicked by successive governments has done a good job of holding a consultation
and producing a balanced report making some useful compromise suggestions about
how to bring UK law into line with what Hirst
(No. 2) and Scoppola (No. 3)
appear to require. Nothing further has happened, and the UK Government
continues to send regular letters to Strasbourg, indicating that it is waiting
for this, or that judgment, to appear – most recently Delvigne itself before doing anything further. At least one
influential legal commentator has called on the Minister of Justice Michael Gove, who
has shown himself to be somewhat more liberal-minded than many had expected in
his relatively new political role, to seize the opportunity of this case to
lead on legislation giving at least some prisoners the right to vote. The Draft
Voting Eligibility Bill may now indeed be retrieved from the long grass and
given further consideration, although no parliamentary time has been set aside.
Meanwhile, opponents of prisoner voting continue to bring forward private members bills before the Houses of Parliament to
reinforce the current position. Liberal voices arguing that Strasbourg does not go
far enough can only look on and hope for a radical change in the political
wind.

The judgment was not generally
received with hostility in the UK. Much of the newspaper commentary seemed to
assume that it would make no difference to the UK position, largely because of
a misreading of the CJEU’s acceptance that the particular ban put in place by
France was in and of itself proportionate, and because they went little further
than reading the formal part of the judgment, which reads:

Article 39(2)
[CFR]…must be interpreted as not precluding legislation of a Member State…which
excludes, by operation of law, from those entitled to vote in elections to the
European Parliament persons who, like the applicant in the main proceedings,
were convicted of a serious crime…’

This seems at first sight to be more
of an endorsement of states’ rights than it really is. In fact, the judgment
leaves many issues open for the UK courts to face as they receive the next wave
of prisoner voting rights applications, taking advantage of the new EU law
flank opened up by Delvigne, assuming
political inaction continues. Indeed, legal commentary has been much more alive to the
implications. Most obviously, it poses a direct challenge to the conclusions of
the Supreme Court in the 2013 case of Chester and McGeoch that it was not possible to make an argument grounded in EU law to
support a case brought in the domestic courts seeking a remedy in respect of
the exclusion of prisoners in UK jails excluded from EP voting rights. Lord Mance’s
lengthy consideration of the issue of EU law raised by
the applicants, in which he relied upon a contorted interpretation of Eman and Sevinger according to which it
was the EU law right given to non-national EU citizens which somehow triggered
the jurisdictional link in that case rather than freestanding protection of
universal suffrage in EP elections, led him to conclude that EU law was not
applicable. His reasoning is worth quoting in detail:

The Court of
Justice [in Eman and Sevinger]did not therefore endorse Advocate
General Tizzano’s broad approach, or import the Strasbourg jurisprudence into
the general provisions of Community and Union law referring to voting in
European Parliamentary elections. There was good reason for this. Eligibility
to vote is under the Treaties and the 1976 Act a matter for national
Parliaments, one of considerable national interest. There is no sign that the
European Commission has ever sought to involve itself in or take issue with
voting eligibility in Member States or specifically with the restrictions on
prisoner voting which apply in a number of such States. The Strasbourg
jurisprudence operates as the relevant control, albeit one that has itself
proved in some respects controversial. It would not only unnecessarily
duplicate that control at the European Community or Union level, it could also
lead to further conflict and uncertainty.

Once again, in Delvigne, the Court has declined to refer to the Strasbourg case
law, but even so the proportionality test it has applied within the field of EU
law may present a minefield for national courts, which must now open up their
domestic prisoner voting rules for scrutiny. Is it proportionate simply to make
the ban match the sentence (as opposed to a ban which can continue beyond the
sentence, but is subject to review, as is the case in France), or does
proportionality implicitly require the seriousness of the crime to be taken
into account? It is hard to imagine that these matters can be fleshed out
without reference to the Strasbourg case law, where they have been most fully
canvassed. The judgment of Lady Hale in Chester
and McGeoch provides perhaps the most overt sympathy on the part of the UK
judiciary towards the Strasbourg position that the UK’s comprehensive ban
approach is simply too lacking in nuance to satisfy the standard under Article
3 of Protocol 1 as articulated in Hirst
(No. 2) and modulated in Scoppola
(No. 3). Applying a custody threshold does not clearly articulate the aim
that disenfranchisement – not in and of itself illegitimate – seeks to promote,
and clearly custody thresholds, shifting over time, will make the question of
whether any particular person convicted of any particular crime can vote in any
given election to some degree arbitrary. The Supreme Court will undoubtedly
have to return to these issues, taking guidance from the CJEU ruling in Delvigne and applying it to the UK
context. Given the refusal to make a reference on the issue of scope in Chester and McGeoch, the Supreme Court
probably will not want to make a reference on the issue of proportionality. But
given the uncertainties that Delvigne
leaves standing, it would probably be a useful opportunity for the Court of
Justice to put a little more flesh on the bones of the proportionality test
that it has articulated. But it may be that the CJEU would be as unwilling a
recipient of such a reference as the Supreme Court would be a generator.

Moreover, now that the issue of a
freestanding right to vote in EU law as a reflection of the principle of universal
suffrage which underpins democratic elections to the European Parliament seems
settled, other limitations on the franchise may be challenged before the
national courts in the UK and elsewhere, including external voting restrictions
and restrictions on voters deemed to lack capacity by reason of disability. The
Brexit referendum franchise in the UK may perhaps also be subject to challenge
based on this argument.

Finally, once any or all of these
issues are settled, there will remain the tricky question of remedies in the
domestic legal order, which the EU law route opens up in ways that the cases in
the UK based on the Human Rights Act and Strasbourg case law do not, by virtue
of the supremacy of EU law and the relationship between the EU legal order and
the national legal order. Two options are likely to be discussed in detail,
namely the disapplication of the domestic rules and the possibility of damages
for state liability. Anticipating that he might be wrong on the issue of the
scope of EU law, Lord Mance already addressed these pre-emptively in Chester and McGeoch. He argued that even
if he were wrong about the issue of the scope of EU law, it would be simply
impossible for a national court to disapply UK law because there would be no
way of ‘reading down’ the Representation of the People Act 1983, which contains
the voting ban, without putting in place positive action including an
administrative process to allow some prisoners to exercise their right to vote,
if the ban applied in their particular case was deemed disproportionate. But
applying proportionality to such a blanket ban is indeed a tricky issue. Consistent with his approach to
interpreting EU law in such a way as to maximize national discretion, Lord
Mance also interpreted the Francovich
principles regarding state liability so as to suggest that in any event there
could have been no successful action for damages.

When does the use of hidden cameras by journalists breach human rights? This issue was clarified by recent judgment of the European Court of Human Rights in Bremner v Turkey. The case was brought by an Australian national about the use of surreptitious
filming of him in his flat talking about Christianity. The filming took place as part of the making
of a documentary about “foreign pedlars of religion” in
Turkey. The programme broadcast revealed
Bremner and in particular did not blur his face. Bremner then sued the programme makers, but
was unsuccessful given the public interest in the topic, and the matter came
before the ECHR. Bremner argued that
there had been a violation of Article 8 ECHR (right to private life) as regards the content of the programme
and the failure of the Turkish courts to indemnify him. In Bremner’s view the
programme exposed him to threats of aggression.
He also referred to Articles 6 (right to a fair trial), 9 (right to religion) and 10
(freedom of expression).

The Court confirmed that the obligation under Article 8 was engaged
via the taking of unwanted photos or video, and that Art 8 included positive
obligations on the state to protect the right to private life, even as far as
between individuals (citing the Grand Chamber decision in Fernandez Martinez v. Spain). Although the boundary between the positive
and negative aspects of the right is sometimes a little fuzzy, as the Court recognised,
in this context the court emphasised the central point was the need to identify
the appropriate balance between the individual and the public interest. The Court also re-iterated that in cases
involving the media and the balance between Articles 8 and 10, the outcome
should not differ on whether the case was brought by the subject of the story
under Article 8 or by the media under Article 10, and the margin of
appreciation should be the same. It
reiterated its principles about the importance of the press (reflecting the
Turkish government’s arguments on this point) but also the factors in Axel Springer and Von Hannover about the scope of the public interest when balanced
against the right to private life. Although
the subject matter of the documentary was in the public interest (and moreover
did not amount to hate speech), techniques such as the surreptitious use of
cameras were damaging to private life and must be used with restraint and in
accordance with ethical principles.
While the Court did not rule out the use of such techniques altogether
(referring to De La Flor Cabrera in
which video surveillance in a public place which was used for evidence in court
did not constitute a violation), it suggested that they would be used as a
mechanism of last resort where the information would be otherwise unobtainable.

In terms of balancing freedom of expression with the right to private
life, the court noted that Bremner was – contrary to the assertions of the
Turkish Government- not a public figure and was not in the public arena. Specifically, the Court rejected the argument
that because Bremner was a journalist he would be a public figure. Bremner was not acting in that capacity and
he was unknown to the general Turkish public.
There was nothing to suggest to him that he might be the subject of
public criticism; rather he thought he would be discussing Christianity with
some people who had expressed an interest in the subject.

Looking at the failure to blur Bremner’s face, the Court noted that the
domestic courts had not considered what Bremner’s identification added to the
public interest bearing in mind that he was not famous. The Court distinguished this case from Haldimann, in which a violation of the
Article 10 rights of journalists had been found. In that case, and what was crucial to the
determination, was that the journalists had pixelated the face and altered the
voice of the person in issue. Thus, despite the margin of appreciation, the
national courts had not struck an appropriate balance between freedom of
expression, nor afforded adequate protection to Bremner’s Article 8
rights. Consequently there had been a
violation of this right.

As regards the right to religion, Bremner had not exhausted national
remedies and the claim was therefore inadmissible. The other two claims were also found to be
inadmissible.

Comment

This case follows reasonably swiftly on from the case of Haldimann earlier this year, which also
concerned surreptitious journalistic techniques. It may also be seen to be a contrast to
Haldimann. There journalists had been
subject to some low level fines for surreptitious filming and the Court found a
violation of Article 10. Here, a case
brought under Article 8, the State was found not to have done enough to protect
privacy rights. Both cases relied on the
principles laid down in Axel Springer: the contribution
to a debate of general interest, how well-known the person being reported on is
and the subject of the report, the person’s prior conduct, the method of
obtaining the information, the veracity, content, form and repercussions of the
report, and the penalty imposed. In Haldimann, the Court
noted that although the subject of the report was a private individual, the
report criticised certain commercial practices rather than focussing on the
individual, the business practices were a matter of public interest, and –
crucially – his face was obscured through pixellation and his voice
altered. The court has repeatedly
held that safeguards afforded to journalists reporting on matters of public
interest apply subject to the condition that they are acting in good faith, in
accordance with the ethics of journalism and have a sufficient factual basis
for their reporting. In Haldimann,
the subject did not even challenge the journalists’ account of events. Haldimann
was seen as important because of the acceptance of the infringement of the
Article 8 rights of a private individual as opposed to a public person.

Bremner shows that there are limits to this possibility. A crucial
distinction between the cases was the fact that Bremner was not disguised – his
face was broadcast without pixellation. Indeed,
the Court in Bremner suggested that
irrespective of the significance of the story in general, a failure to blur an
individual’s face would be problematic [para 81]. Another difference – though the Court did not
emphasise this element - was the invasion took place in his flat; even though
Article 8 applies to business premises, presumably an invasion into the home
carries more weight than intrusion as a business. Even in Haldimann
it was unclear whether the Court would support an intrusion where there to be
other options for acquiring the evidence to support a story; Bremner re-iterated the principle that
such techniques should be used only as a matter of last resort. While this arguably reintroduces some doubt
in the assessment, it certainly matches the approach taken by broadcasters in
this country, and even the terms of the Editors’ Code in respect of the
press. What does seem clear (and lines
up with the much older case of Peck) is that when footage or photographs of
private individuals are broadcast, pixellation and other methods of disguising
the subject are important and indeed may be a boundary line factor between
acceptable and unacceptable. What is
less clear from this is whether the filming of subjects in their homes is a
separate infringement against which the state must protect.

Tuesday, 13 October 2015

The CJEU recently gave judgment in the Weltimmo case, concerning the reach of data protection supervisors,
ruling that one Member State’s supervisor can have jurisdiction on
organisations mainly established beyond the border of that State. This ruling
could have an impact on two key issues under discussion as regards the proposed
data protection Regulation: the external scope of that Regulation (discussed here)
and the powers of national data protection authorities and the relationships
between them - particularly whether there should be a 'one-stop shop' for regulation (discussed here).

Facts

Weltimmo is
a company registered in Slovakia. It runs a website advertising the sale of
properties in Hungary and, for that purpose, it processes the personal data of
the advertisers of the property. Many advertisers sent a request by email for
the deletion of both their advertisements and their personal data but Weltimmo
did not delete such data and charged the advertisers for the price of its
services. As the sums claimed were not paid, Weltimmo forwarded the personal
data of the advertisers to debt collection agencies. The advertisers
complained to the Hungarian data protection office.

Each supervisory authority is
competent, whatever the national law applicable to the processing in question,
to exercise, on the territory of its own Member State, the powers conferred on
it in accordance with paragraph 3. Each authority may be requested to exercise
its powers by an authority of another Member State.

Weltimmo
argued the Hungarian supervisor did not have jurisdiction but should instead
have referred the matter to the Slovakian supervisory authority. The
Hungarian authority referred, however, to Article 4 of the Directive, which
states:

Each Member State shall apply the
national provisions it adopts pursuant to this Directive to the processing of
personal data where:

(a) the processing is carried out
in the context of the activities of an establishment of the controller on the
territory of the Member State; when the same controller is established on the territory
of several Member States, he must take the necessary measures to ensure that
each of these establishments complies with the obligations laid down by the
national law applicable….

The question
then was where Weltimmo was established. In any event, no matter what the
applicable law, the Hungarian authority took the view that under Article 28 it
had jurisdiction. It was these questions of interpretation that were
referred to the Court of Justice.

Judgment

The Court's
judgment broadly follows the approach of the Advocate General (Opinion
25thJune 2015). The Court determined that the national law
applicable to the controller in respect of that processing must be determined
in the light of Article 4; Article 28 deals with role and powers of the national
authorities. So the key question was whether the processing was 'in the context
of activities of an establishment' – and to ensure protection of fundamental
rights, this concept should be interpreted broadly. In this, the Court referred
to Google Spain (discussed
here). Drawing on the approach of the Advocate General, the Court
noted that the meaning of 'establishment' here is a broad and flexible concept
– and specifically not just the question of where the data controller is
registered. The test relates to:

both the degree
of stability of the arrangements and the effective exercise of activities in
that other Member State must be interpreted in the light of the specific nature
of the economic activities and the provision of services concerned. This is
particularly true for undertakings offering services exclusively over the
Internet. [para 29]

The Court
emphasised that the concept of 'establishment' extends to any real and
effective activity, even a minimal one, exercised through stable arrangements.
Specifically, depending on the circumstances, the presence of even one
representative can suffice. In this case, Weltimmo was certainly
established in Hungary. Not only was there a representative, a bank
account and contact details in Hungary, but Weltimmo pursues a real and
effective activity there.

Having
determined that there is an establishment, the next question is whether the
data processing takes place in connection with the activities carried out
through that establishment. Again, we see the Court referring to its
reasoning in Google Spain: that the processing is not required to
be 'by' the establishment, but instead the broader concept of 'in the context
of' activities carried out through it. The Court found that aspect satisfied
here. In so doing, it noted that the nationality of those whose data was
processed is not relevant. The analysis is all about the
data controller not the data subject here. This reasoning suggests that
the applicable law could be that of Hungary but the Court directed the national
court to verify the finding of facts.

The Court
continued that, in the event of the application of the law of another Member
State, Article 28 of the Directive would come into play. According to
that provision, each authority has the responsibility and the power to ensure
compliance on that territory with data protection rules, that is, it has
jurisdiction to act. Obviously, this is different phraseology than that
found in Article 4 but the Court did not address the question of what 'on the
territory of its own Member State' means (which may not be clear in a digital
context). Instead it held that where a complaint is referred to a national
authority, it may investigate whatever the applicable law. As the
Advocate General pointed out, the powers of intervention of the supervisory authority
must be exercised in compliance with the territorial sovereignty of the other
Member States and respect for the rule of law, with the result that a national
authority cannot impose penalties outside the territory of its own State.
In such a situation the authority should request the cooperation of the
relevant national authority, as foreseen by Article 28, to ensure that the
rules are enforced.

Comment

The upshot
of this decision is that it is clear that there is no one-stop-regulation
approach currently in effect. This means that a business with operations
in more than one Member State may be subject to multiple interpretations of the
data protection rules. In determining which and how many authorities have
competence, the key question becomes that of 'establishment'. While the
data subjects and their nationality are not relevant, the Court has not taken a
formal legal approach. We can look at whether there are employees or a
physical representation, but also business practice can be taken into account.
It is significant that the Court notes the specificities of Internet
businesses. Implicitly, if the business is reaching into the territory on
an on-going basis, physical representation would be unnecessary to find
'establishment'.

This approach
is re-affirmed by the Court's re-iteration of its stance in Google
Spain with regard to the connection between the processing and the
business. The Court is taking a broad view of whether such connection will
arise; arguing points based on legal form will not help here. That could have
consequences for companies such as Facebook which are currently clinging to the
argument that they are regulated by Ireland to try to defend claims from
authorities across the EU. On the basis of Weltimmo, that
might not now be such a good argument. This expansive scope of applicable
law may also mean that the situation in Article 28(6) will occur less
frequently.

Looking more
generally, the reasoning in Weltimmo suggests that the Court
is sticking to its stance in Google Spain, emphasising the
fundamental nature of privacy and data protection and the need to interpret
legal concepts broadly to ensure an adequate protection for those rights.
This trend has, of course, since been confirmed by the subsequent judgment in Schrems. It
remains to be seen whether the judgment in Weltimmo
has an impact upon the planned Regulation.

*This is
based on a blog post previously published on the SCL Blog, and
republished with kind permission

Thursday, 8 October 2015

Professor Daniel Sarmiento, Professor of EU Law at the University Complutense of Madrid*

EU competence is a touchy area of EU law. It has
become very complex, together with the also intricate case-law on legal bases,
which, after several decades of case-law, is not always easy to follow. After
the entry into force of the Lisbon Treaty, EU competence has become a major
domain for EU constitutional lawyers and it deserves very careful attention.
The fact that the Treaties now include a typology of EU competences and enumerate
them is a sign that many future battles in EU law will be fought in this
terrain.

Furthermore, cases like Pringle, Gauweiler
(discussed here) or Vodafone
prove that issues of competence and legal bases are not the exclusive domain of
institutional litigation, but areas that can be brought to the courts by
private parties too. The Court of Justice has always been sensitive to these
cases and it has dealt with them with utmost care, mostly in Grand Chamber
formation.

Last week a rather surprising route for EU
competence litigation came under the radar. In the case of Anagnostakis (no English version available, I’m afraid),
the General Court ruled on an action of annulment brought by a private party
against the decision of the Commission to reject, on the grounds of lack of
competence, a European citizens’ initiative (ECI). Mr. Anagnostakis, together
with more than a million supporters, brought a proposal pursuant to Article
11.4 TEU (which provides for the existence of ECIs) and Regulation 211/2011
(which sets out the detail of the ECI process), demanding that the Commission introduce
in EU legislation “the principle of state of necessity, according to which,
when the financial and political subsistence of a State is at stake due to its
duty to comply with an odious debt, the refusal of payment is necessary and
justified”. According to the promoters, the legal base of the initiative was to
be found in Articles 119 TFEU and 144 TFEU.

The Commission did not seem very impressed and,
pursuant to Articles 4(2)(b) and (3) of Regulation 211/2011, it refused to
register the proposal, based on a lack of competence.

Mr. Anagnostakis introduced an action of annulment
before the General Court, attacking the Commission’s Decision for breach of Articles
122(1) and (2) TFEU, 136(1) TFEU and rules of international law.

The General Court dismissed the action, but it did
not limit itself to scrutinizing the Commission’s duty to state reasons. Instead,
the Court went into some detail in order to ascertain if haircuts in government
debt are not only a competence of the EU, but also in conformity with EU Law.
In a rather surprising format and procedural context, the General Court dealt
quite openly with one of the Union’s hottest potatoes at the time: the unsustainable
Greek public debt.

It is true that the judgment is quite laconic in
its reasoning, but it relies several times on Pringle and Gauweiler
when interpreting Articles 122 and 136 TFEU. But no matter how laconic it may
be, the judgment makes an assertion that will probably not go unnoticed when
the Greek public debt becomes politically toxic again. In paragraph 58 of the
judgment, the General Court states that “the adoption of a legislative act
authorizing a Member State to not reimburse its debt, far from being a part of
the concept of economic policy guidelines in the sense of Article 136.1.(b)
TFEU […] it would have the effect of substituting the free will of the
contracting parties by a legislative instrument allowing for a unilateral
abandonment of public debt, which is clearly not what the provision allows”
(free translation).

The assertion might be formally correct in light of
the limited scope of Article 136(1)(b) TFEU, but the language of the judgment is
politically explosive. Even in legal terms, one wonders if Pringle was openly precluding any kind of haircut
of government debt by any means. After reading the General Court’s
decision in Anagnostakis, it seems
that haircuts will be mission impossible in the future, despite the
circumstances, the consensus among Member States (the IMF has been explicitly
positive about a future Greek haircut) and, above all, the terms and scope of
the haircut.

But of course, this judgment could be just a
superficial decision undertaking a superficial degree of scrutiny due to the
peculiar procedural context of the case. It could be argued that highly
contested issues such as the EU’s competence in the area of EMU is something
should be left to the Court of Justice, but not to the General Court in the
circumstances of a case like Anagnostakis.
The General Court might be aware of this and thus the brief and
straight-forward reasoning of the decision. However, after reading the judgment
several times, the more I read it the more explosive it sounds to me.